Tag: introduction to book keeping and accounting

Questions Related to introduction to book keeping and accounting

When a new company is formed to take over the business of an existing company it is known as _____________ .

elements of business introduction to book keeping and accounting meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

  1. Amalgmation

  2. Absorption

  3. Internal Reconstruction

  4. External Reconstruction

Show answer
Correct Option: D
Explanation:

When a new company is formed to take over the existing company's business it is external reconstruction while when the company reorganizes itself and reworks on its capital and other liabilities and other assets it refers to internal reconstruction.No company is dissolved in case of internal reconstruction.

When one existing company takes over the business of another company or companies, it is _____________.

elements of book keeping and accountancy introduction to book keeping and accounting meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

  1. Amalgamation

  2. Absorption

  3. Internal Reconstruction

  4. External Reconstruction

Show answer
Correct Option: B
Explanation:

Amalgamation means merger of two or more companies and forming of altogether a new company.

In case of absorption, the company which is taking over(buying company) remains while one is taken over(selling company) dissolves.